Many travel firms affected by Covid-19 are struggling to access loans with low interest rates from the government’s credit package as banks have denied their applications out of concern over their ability to repay the debt or because the borrowers failed to demonstrate positive cash flow.
To address this situation, Vietnam Tourism Advisory Board (TAB) has proposed a government-guaranteed credit package worth VND150 trillion to support pandemic-hit travel companies, TAB noted in its third letter to prime minister Nguyen Xuan Phuc.
Under this government-guaranteed package, each firm should be allowed to take out a maximum loan amount equivalent to the total value-added tax, corporate income tax and payroll tax it paid in 2019.
The capital should be disbursed quarterly, starting this month, and the borrower will repay the debt in two phases.
TAB noted that the global pandemic and travel restrictions at home and abroad have taken a heavy toll on the tourism industry. International tourist arrivals took a nosedive, while the domestic tourism segment has also encountered heavy losses. Moreover, the number of unemployed people has been soaring.
As the government will find it difficult to support affected businesses with cash, TAB suggested the government offer this credit package through the banking system to help tourism operators curb their financial losses due to the pandemic.
The credit package’s value is equivalent to 25 percent of the industry’s revenues earned last year, TAB remarked.
To take out loans from the credit package, the borrower must possess a business registration certificate for travel firms, have charter capital of at least VND3 billion, have at least 10 full-time employees and be able to prove it has paid payroll tax and personal income and value-added taxes.
Support from this credit package will help bail out businesses. Further, lenders will find it easy to handle the loan approval process, according to TAB.
In its two previous letters sent to PM Phuc, TAB had suggested supporting policies including reductions in taxes and land lease rates to help virus-hit businesses recover.
